What should you do when unexpected expenses come into your finance? When such situations come, it will dissolve all your savings and disturbs your finances. It will be quite simple for the individual to handle such unforeseen bills if they have savings or a reliable source of income.

But when the person does not have enough funds or not having savings, they tend towards the loan. One of the most popular loans available to help you with unexpected expenses is a personal loan.

Are there any benefits of taking a personal loan against a fixed deposit? To get the answers to this question, you should read all the facts of the article.

Loan against the FD 

If you are in urgent need of funds, you can use your FD as collateral to get the same or less amount of loan against it. A personal loan against the FD is a convenient and quick way to get substantial funds without hurting your savings or breaking the deposits in your bank account.

Pros of FD-Backed Loan.

Taking a loan against the FD, come with several benefits. Here is the list of the benefits made by the FD-backed loan.

Get the loan at nominal interest rates

The most important benefit of FD-backed loans is that they come with significantly low-interest rates. This is because the NBFC or bank already has the money borrowed in the deposit form.

So, the lenders often provide the FD loan for personal reasons at a minimum of 2% more than your FD rate.

Apply without any hassles

It is easy to fill out the online application form for a personal loan against FD. If you already have a relationship with the bank, you only need to submit minimal documentation.

Many lenders provide mobile banking portals that reduce the time from the application to loan approval.

Earn the interest continuously on FD

As we tell you, the FD works like collateral, but it does not mean you are not earning the interest on it. Also, you do not need to break the FD to take the loan and continue to earn the interest on it. This way, you can easily keep your savings instrument while paying the EMI to the loan amount.

Avoid paying the foreclosure charges and hefty processing fees

When you get the personal loan against your FD, your lender does not charge any processing fees or deduct the nominal fees. However, most lenders do not impose any hidden charges or not deduct foreclosure charges.


An FD-backed loan is a great investment option that meets your financial requirements. The best thing is that you can easily get up to the 90 % of the FD deposit amount as a personal loan.

Regular loans for personal use are your best option if you only require money for a short period of time.